Journal Article

Residential investment over the real estate cycle

Abstract: Much attention recently has been given to the possibility of a slowdown in the U.S. residential real estate market. While real residential investment has continued to grow and existing house prices have held up through the first quarter of 2006, analysts have pointed to other signs of slowing. Two commonly cited indicators are an apparent slowing of sales of new and existing homes and a buildup of inventories of new homes in many markets. In this Economic Letter, I characterize past episodes of residential investment downturns and evaluate how specific housing market variables, such as sales volumes and inventories, perform as predictors of downturns.

Keywords: Investments; Housing - Prices; Real property;

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: FRBSF Economic Letter

Publication Date: 2006

Order Number: 15